How the UK’s Green Deal Helped Shape US Energy Efficiency Programs

In 2015, the UK folded its Green Deal program. While ambitious, this energy efficiency program never took off the way the government hoped. After three years, fewer than ten thousand loans had been issued. Let’s look at the issues with the UK’s Green Deal and how others have learned from those mistakes.

The Issues with UK’s Green Deal

Scams eroded trust from the beginning. However, that was only the start of the problems with the Green Deal. For one, the program subsidized renovations that weren’t advantageous to homeowners. And the cash-back program the British government set up to subsidize the Green Deal was more popular than the loans. By the time the program was shut down, nearly twice as much money had been given out through the cash back program than loans.

How PACE and Other Programs Learned from These Mistakes

The British program focused on weatherization. But in reality, most people won’t pay for weatherization unless they’re really uncomfortable. This same issue was seen in the New York WHEEL program, where people were much more likely to use the money for buying new HVAC equipment than weatherize a home or, at best, weatherized the home in addition to buying a new furnace. The Property Assessed Clean Energy or PACE program is much more flexible in how people can use the money, and most of its money has gone to solar projects and equipment upgrades like buying more energy efficient HVAC units.

About the PACE Program

But how does PACE finance work exactly? Firstly, the city or county creates a land-secured financing district or similar entity. This allows them to offer issue loans secured by the property and collect the payments as a line item on someone’s property tax bill. PACE is available to both residential and commercial property owners.

The PACE assessment is attached to the property, not the individual, so the loan payments are transferred when the home is sold. This makes the loans more attractive to many homeowners who otherwise might not make the upgrades because they may not stay in the home long enough to recoup the costs of new solar panels on the roof or more insulation in the attic.

Property owners can use the money for a variety of projects. Weatherization is only one option. Another way people can use the money is for energy efficiency and water conservation projects. These projects range from landscaping that uses less water to plumbing and electrical upgrades that save water and/or energy. This category includes buying more energy efficient appliances, as long as they aren’t considered portable.

People can also use the money to make their home safer, such as resistant to earthquakes, hurricanes, and other natural disasters. They can also upgrade the property in ways that achieve multiple objectives, such as installing double pane windows and a new roof that provides greater wind protection. However, the project doesn’t include portable items, so you can’t use it to buy new energy-efficient lights.

Conclusion

While the UK’s Green Deal didn’t go as well as expected, other countries have learned from its mistakes. They are now reaping significant financial savings in addition to the environmental benefits.